EDITORIAL: Is the Coalition government losing its way?

by Peter Westmore

News Weekly, May 10, 2014

With the forthcoming Budget session of federal parliament later in May, and a change in the composition of the Senate on July 1, it is not surprising that the Abbott government is preoccupied with the cut-and-thrust of parliamentary politics.

The Budget looms as a major test of the Abbott government’s determination to address Australia’s mounting budget deficit, and its commitment to return Australia to budget surpluses in the foreseeable future.

The “leaks” that have filled the newspapers in recent days now should leave the public in no doubt about what the future holds. Prime Minister Tony Abbott and Treasurer Joe Hockey have decided to administer the harsh medicine of higher taxes and restricted access to government services early in their term of government, in the hope that there will be a better future.

At the same time, it is watching closely the changes in the Senate from July 1, which will determine how much of its legislative agenda gets through the parliament.

During the 2013 election, Tony Abbott campaigned hard on policies of abolishing the carbon tax and the mining tax, balancing the federal budget and stopping the flow of boat-people from Indonesia. The people of Australia elected him in the expectation that he would deliver on his promises.

However, as a result of the Labor Party and the Greens together holding 40 of the Senate’s 76 seats, the Senate has been able to defeat Mr Abbott’s attempts to repeal the carbon and mining taxes, to get rid of the Climate Change Authority (which was established by Kevin Rudd) and the multi-billion dollar Clean Energy Finance Corporation.

From July 1, Labor and the Greens will lose control of the Senate when their number of seats shrinks to 35, significantly short of the 38 required to block legislation.

However, the Abbott government, with only 33 votes, will require support from minor parties such as the Palmer United Party, Family First, the Democratic Labour Party (DLP), the Liberal Democrats and the solitary independent, South Australia’s Nick Xenophon.

If the new Senate proves as uncooperative as its predecessor, Mr Abbott might be tempted to call a double-dissolution election. But with the election quota halved to about 7.7 per cent, there is little likelihood that the Coalition would win a majority in its own right.

More likely, control of the Senate would shift even more towards minor parties such as the Greens and the Palmer United Party — which is where things are at the moment.

While the government is facing a major battle over its budget, and will undoubtedly have issues dealing with a fractious Senate, some of the bigger issues facing Australia are simply being put on the back-burner.

Since the election, major infrastructure works promised have included the construction of the second Sydney airport at Badgery’s Creek, near Liverpool; a $3.5 billion expenditure on road works in Western Sydney linked to the new airport; further upgrades to the Bruce Highway in Queensland; and the construction of the East-West Tunnel in inner-city Melbourne.

But there seem to be no plans for the development of Australia’s untapped water resources, which see huge quantities of water flow from coastal rivers into the oceans every year; little expenditure on improved rail freight to lift the capacity of Australian coal exports; little expenditure on Australian ports, particularly bulk-loading ports; and no significant government investment in the expansion of Australia’s electricity industry.

Over the past six months, a number of leading Australian manufacturers, including GMH, Toyota, BP’s oil refinery in Brisbane, Boeing and Philip Morris Australia, have announced that they will discontinue production in this country. This follows the earlier closure of Ford and a host of local manufacturers.

The response of the federal government has been dismal, to say the least. It commissioned a report into the future of the motor-manufacturing industry in Australia, which has been delivered to the government, but not released.

The Productivity Commission’s interim report was a disappointing recital of excuses as to why Australia could not manufacture motor vehicles to compete with those produced overseas.

There was no mention of how Nissan began manufacturing motor vehicles in England in the 1980s, at a time when Britain’s motor industry was collapsing.

Nissan’s Sunderland plant, built with government assistance, cost just £50 million ($120 million), and originally employed 470 people on a single eight-hour shift, to produce 24,000 vehicles a year.

The plant was a success. It now produces over 500,000 vehicles a year, and has a workforce of 6,000. Two other Japanese manufacturers, Toyota and Honda, have since built car factories in Britain.

If the Abbott government is to succeed, it will need to build a future for Australia’s agricultural industries and manufacturing. This will be its greatest challenge.